Ashford University wins accreditation

Regional commission finds for-profit college has transformed its culture

San Diego’s Bridgepoint Education said Wednesday that Ashford University received initial accreditation to operate in California from the Western Association of Schools and Colleges.

The move ends a year-long accreditation crisis for Bridgepoint-owned Ashford – which saw its first attempt to achieve accreditation in California rejected because of high dropout rates and an emphasis on recruiting new students over education.

Since then, Ashford has worked to fix problems highlighted by the WASC, including reducing class sizes, laying off some recruiters and reassigning others to jobs aimed at keeping students in school. It also has cut hundreds of workers, which the company attributes to declining enrollment.

WASC said in a letter to Ashford that “the Commission found that the University has responded to commission concerns and judges that it is now in substantial compliance with commission standards." The accreditation is good for five years.

“This is not what the market anticipated or what I anticipated,” said Peter Appert, an analyst with Piper Jaffray. “Obviously, the first time around WASC was fairly critical, and WASC has a reputation for being one of the more stringent of the accreditation agencies. “

Bridgepoint announced accreditation approval after markets closed. Its shares ended Wednesday at $12.61 but surged 26 percent to $15.90 in after-hours trading.

Accreditation is critical for Bridgepoint, which owns Ashford University and the University of the Rockies. It’s required for students to qualify for federal student loan and other government financial aid. Bridgepoint received more than 85 percent of its $968 million in revenue last year from federal financial aid programs

“I have been saying it was a 50-50 proposition but I think most people were leaning toward them not getting approval,” said Trace Urdan, senior analyst with Wells Fargo Securities. “They have leapfrogged the sector in terms of trying to adhere to the spirit of the accreditors’ wishes as well as the letter of the accreditors’ wishes.”

Bridgepoint and other for-profit colleges have been criticized in Congress and elsewhere for recruiting students ill prepared for college level work, resulting in high drop-out rates and former students saddled with hefty debt.

Ashford University is located in Iowa, but a majority of its 78,000 students take classes online. Many of the online programs are run from San Diego.

About two years ago, the accreditation agency in the Midwest – the Higher Learning Commission – adopted a rule requiring a majority of Ashford’s operations to be based in the Midwest to maintain accreditation. So rather than move, Bridgepoint sought to switch accreditation for Ashford from a Midwest to California.

WASC rejected Ashford’s initial request last summer, sending Bridgepoint’s shares plunging more than 50 percent. After hiring more full-time faculty and taking other steps to address problems, the university reapplied.

A WASC team visited Ashford locations in April. It released its final report to Bridgepoint Wednesday. It will make the report public today on its website, www.wascsenior.org.

In a press release, Bridgepoint quoted a sentence from the WASC report that said "the team found an institution that has been fundamentally transformed and whose culture has been changed in significant ways, including a shift from a market driven approach to an institution committed to student retention and success.”

While analysts cautioned that they needed to read the full report to put the WASC statement in context, they noted that it was “extremely positive.”

“You have to give the accreditation agencies a little bit of credit,” said Urdan. “They did identify an institution that was probably at one end of the spectrum in terms of (student turnover) and they’ve effectively moved it to a more responsible place.”

In a statement, Bridgepoint Chief Executive Andrew Clark said, “we appreciate WASC's recognition of Ashford University's efforts and know that those same efforts will benefit our students through both the ongoing and new initiatives Ashford has implemented throughout this process."

Ashford University’s enrollment has shrunk from nearly 95,000 students in March 2012 to 78,782 at as of March this year. While some of the decline stems from its effort to win WASC accreditation, a portion is attributable to increased competition from traditional non-profit colleges offering online degree programs, say analysts.

Bridgepoint said it expects enrollment to dip to 71,000 to 72,000 students at the end of the second quarter. It officially reports financial results on Aug. 6.

“They needed to change the model to address changes in the industry and changes required by the accreditation agencies,” said Appert, the Piper Jaffray analyst. “So the new Ashford University is smaller and healthier than the old Ashford University.”